Orange County taxpayers may have to pay a lot more for a $1 billion Huntington Beach ocean desalination plant if the Mesa Water District gets its way.

For the past decade the developer, Poseidon Resources, has promised taxpayers they won’t have to pay a cent for construction of the desal plant, which would create about 56,000 acre-feet of pricey drinking water every year, if approved.

The tax truth came out unexpectedly at a special Mesa Water board meeting held June 27 to promote the Poseidon project’s supposed benefits.

About 100 Mesa area residents were in the audience.

Invited speaker Robert Sulnick made Poseidon’s case during a 20-minute presentation.

Opponents of the desal plant were not invited to speak.

Sulknick was introduced as an environmental attorney and the executive director of OC WISE–with no mention (until questioned by this reporter after his presentation) that the group is a Poseidon front of developers and that he is one of Poseidon’s paid consultants.

A member of the audience questioned Sulnick about a survey mailed by Mesa Water asking her opinion of a ballot initiative to increase property taxes by $89 in order to pay for the desal plant.

Mesa’s public relations officer, Stacy Taylor, who was facilitating, was caught by surprise and so was Sulnick.

“Robert, you wouldn’t know anything about that,” Taylor said.

“I don’t know anything about it, but I was going to make up an answer,” Sulnick joked in return.

Poseidon’s Robert Sulnick and Mesa Water’s Stacy Taylor have a laugh over Mesa’s proposed tax increase. Photo from video: John Earl

Laughter ensured, but the 11-question survey is no joke. It was sent with a two-page “Information Fact Sheet” explaining that project funding “could come from different sources” including “a ballot measure that would require two-thirds voter approval.”

The mailer mixes hotly disputed assertions, such as calling the project “environmentally sensitive and cost-effective”, with leading questions.

For example, respondents are asked if each of the 11 assertions “makes you more or less likely to support the tax” based on the assumption that:

“Investment in a desalination project makes sense for Orange County – it is a cost-effective, long-term solution to our local water supply challenges.”

The so-called fact sheet explains that to make Poseidon’s project cost-effective “a potential ballot measure could provide funding for the reliability surcharge and construction of additional distribution systems throughout the groundwater basin rather than a rate increase on your water bill.”

Taylor said that the survey was sent to 6,000 Mesa Water ratepayers and that she was told it was conducted by “one of the best ballot initiative companies in the state of California”.

She didn’t know the company’s name, how much the survey cost or who paid for it. But said she would be happy to provide that information and agreed it “was a very good idea” to post that information on the Mesa website.

The survey itself was already posted on the website, but the cost information remains unpublished at press time.

OCWD manages the county’s groundwater basin from which 19 north-county water retail agencies, including Mesa, pump at least 70 percent of their drinking water.

OCWD General Manager Mike Marcus told the Voice by email that Mesa acted on its own and announced the survey at an early-morning OCWD board meeting on June 10.

Mesa Water supplies 108,000 residents of Costa Mesa and Newport Beach with water from a small part of the groundwater basin.

The agency brags about its own “drought proof” and “100 percent” self-sufficient water supply; thus, it has no need for the 56,000 acre feet of imported water that Poseidon’s desalinated water would replace—at three times the cost–in order to receive a $399 million government subsidy required to make the project viable to private investors.

But the small water agency has long sought to influence the debate over the proposed desalination project and to promote desalination in general, working closely with Poseidon to do that.

Since then, Mesa Water board president Shawn Dewane has been CalDesal’s president. Dewane also serves on the OCWD Board of Directors.

Critics of the project never took the no-tax promise seriously, in part because of Poseidon’s insistence on receiving the subsidy.

And recently Poseidon and OCWD tentatively agreed that the water agency would pay for the infrastructure needed to deliver the desalinated water, a public cost that could reach hundreds of millions of dollars.

But on its website Poseidon still promises that its desal plant will be built “At no cost to taxpayers”.

The majority of the Huntington Beach City Council members who approved local permits for the project in 2006 accepted at face value Poseidon’s promise of private-only funding.

“We’re going to need the water”, Council Member Don Hansen said at the time. “It’s not us building the plant. It’s all private investment.”

A final contract proposal with Poseidon is expected to come before the OCWD Board of Directors by the end of the year.

Sometimes a person wants something so badly that he or she starts to believe it’s real–or maybe it actually becomes real.

For Cathy Green, president of the Board of Directors for the Orange County Water District, that something is a $1 billion ocean desalination plant that Poseidon Resources Inc. wants to build along the southeast coast of Huntington Beach in order to sell 56,000 acre feet of desalinated water to the public agency for the next 50 years.

OCWD manages the Santa Ana River groundwater basin and operates the largest toilet-to-tap recycling system in the world, which uses the same reverse osmosis process that would be used by Poseidon but for less than half the price.

Feigns of due diligence aside, the intentions of the Poseidon-obsessed OCWD board have always been clear: there will be a desalination plant and OCWD will contract to buy all of its 56,000 acre-feet of desalinated seawater for the next two generations at about three times or more the price of imported water, regardless the cost or need.

Green, who has often helped Poseidon by-pass important project-related questions, showed up at the June 12 meeting of the California Coastal Commission, which will approve or disapprove two of several permits Poseidon needs to resolve before moving forward.

In the hope of making that happen, she had an important announcement to make.

“I am here to inform the commission that on May 14 that Orange County Water District’s Board of Directors voted to approve a term sheet (pre-contract) with Poseidon Resources to purchase the full 56,000 are feet per year capacity of the Huntington Beach desalination project,” she announced, firmly.

“When the commission was considering the desalination permit application in November of 2013, the issue of who would buy the water was unresolved. Today, this issue has been resolved,” she added.

But Coastkeeper representative Ray Hiemstra, who opposes the Poseidon project, happened to be at the meeting on another matter and was jaw-struck by Green’s announcement.

“It appears that Cathy Green is moving faster than some of the board on OCWD’s support of Poseidon,” he wrote in an email to other Poseidon opponents and the Surf City Voice.

Hiemstra was concerned because he knew that the existence of water purchase agreements was a reason for the Commission’s previous approval of Poseidon’s nearly identical Carlsbad desalination plant.

But no such deal was made with Poseidon at the May 14 OCWD meeting, as Director Harry Sidhu explained before he voted to approve the term sheet and go forward with final contract negotiations.

“It is not a hundred percent done deal today. It is just a good start in moving forward,” he advised the overflow audience there to speak during public comments.

Sidhu was technically correct but he overlooked an important point explained in the staff report. By approving the term sheet, “the District is signaling a desire to explore in much greater detail the exact terms of a final Contract with Poseidon Resources to purchase the plant water.”

The Poseidon train has left the station but Green is highballing it down the track–with the help of most of the other board members, including Shawn Dewane, Stephen Sheldon, Denis Bilodeau, Harry Sidhu, Roman Reyna, and Dina Nguyen.

But OCWD’s chief engineer, John Kennedy, thinks that Green had her facts right.

“She [Green] was just saying that the OCWD, via the approved term sheet, would buy all of the water, which is 100 percent accurate,” he explained. “We are working to see what portion of the water would be recharged into the groundwater basin by OCWD and what portion would go directly to the cities.”

If the project proceeds, he added, OCWD “would have an agreement with Poseidon to buy all of the water,” (emphasis added) along with parallel agreements with any water agencies that agreed to buy the water directly that otherwise would be injected into the groundwater basin.

But that’s a far cry from Green’s claim that the issue of who will buy the water has been resolved.

Who will buy the water was just one of several cost and water distribution issues still unresolved, as Kennedy himself pointed out in his report to the OCWD board on May 14.

That’s why he asked for and received $230,000 for a study to help determine “how much would the Water District take, if we do take the water, how are we going to get it into the ground, how much do the cities’ retail water districts want to take. And we would figure out exactly where the water’s going to go, exactly what pipelines and distribution system improvements we need.” (emphasis added)

Until now, only one Orange County water agency, Santa Margarita in South County, has committed to buy Poseidon’s water. Nor have any of the District’s 19 members, who pump groundwater from the basin for 70 percent of their supply, indicated their willingness. One member agency, the Irvine Ranch Water District, has openly opposed the project.

Although some of the hapless adventurers may have found what they were looking for, those who didn’t drink too much seawater were usually disappointed.

Today, it looks like Poseidon, the God of the Sea, is up to his old tricks again.

This time, taking corporate form (same as being human under American law), he’s promising to build a new source of water–an ocean desalination plant in Huntington Beach–that will create an additional and reliable supply of water for the Orange County Water District’s ratepayers.

At least that’s what most people think he is promising.

But is he?

Any proposed deal between the OCWD and Poseidon Resources Inc. to build an ocean desalination plant will depend upon a subsidy of $400 million, doled out to Poseidon for a 15-year-period, courtesy of water ratepayers throughout Southern California.

The OCWD manages the Santa Ana River Groundwater Basin, which supplies over 70 percent of the drinking water for Central and North Orange County.

The desalination plant would turn about 56,000 acre feet of seawater into drinking water every year. Continue Reading

A public forum held by Garden Grove mayor Bao Nguyen last night at the city’s community center examined the cost of and alternatives to a proposed $1 billion ocean desalination plant promoted by the Orange County Water District.

Those issues–and the panel of local experts who discussed them last night–have been all but ignored by most of the OCWD Board of Directors, some of whom have strong financial and political ties to Poseidon Resources Inc., the company that would build the plant, and its big-business allies.

The OCWD maintains the county’s groundwater basin, which holds 66 million acre-feet of water and provides about 70 percent of the water used in central and northern Orange County, serving 2.3 million people.

For the past 18 months a clique of four board members, Cathy Green, Shawn Dewane, Stephen Sheldon, and Denis Bilodeau, joined last January by Garden Grove Councilmember Dina Nguyen, have steered the District straight toward a long-term contract with Poseidon.

OCWD staff presented a proposed term sheet (pre-contract) to the board on May 14.

The board approved the term-sheet 7 -3. Nugyen voted for it.

Dina Nguyen on the right at May 14 OCWD meeting. She voted to negotiate a contract with Poseidon. Several Garden Grove residents attending the forum complained that she was non responsive. She did not attend the forum.

Nguyen, who was the beneficiary of $11,000 in “independent expenditures” by a Poseidon related PAC in her recent election to the OCWD board, was invited to participate in the forum but was a no-show.

Staff is now negotiating a contract with Poseidon that would lock the district into buying 56,000 acre-feet of desalinated ocean water per year, regardless of need, for the next half-century.

Poseidon’s water would cost about $2,000 an acre-foot out the door, more than 3 times what OCWD currently pays for the untreated water it imports from the Metropolitan Water District of Southern California (MET) to help maintain the county’s groundwater basin supply.

Poseidon and its allies on the OCWD board claim that its more expensive water would be a “reliability premium” akin to car insurance that would add to the county’s water supply portfolio and guarantee water during a drought.

But, in order to be financially viable, Poseidon is demanding hundreds of millions of dollars in ratepayer-backed subsidies for the first 15 years of the contract. In return, MET rules require that Poseidon’s 56,000 acre-feet of desalinated water replace an equal amount of (cheaper) imported water, which would then be made available to water agencies outside of OCWD’s service area.

There would be no net gain in water supply for the district, which would be paying three times as much for Poseidon’s replacement water while subsidizing the cheaper imported water for other agencies. And the county wouldn’t receive more water during a drought.

This reporter has repeatedly asked Poseidon officials and OCWD directors to explain the benefit to ratepayers of paying three times as much for water than necessary and subsidizing cheaper water for ratepayers outside of Orange County, but to so far mum’s the word.

For the first 15 years, the proposed pricing scheme would pay Poseidon a surcharge of up to 20 percent on imported MET water (at the higher MWD treated rate) on top of a 3 percent annual compounded surcharge that recurs for the life of the contract, underlying subsequently declining variable surcharge rates.

A Surf City Voice review of the proposed pricing scheme shows that after 15 years ratepayers would pay up to $2,700 per acre-foot for Poseidon’s water (assuming the required $56,000 af) versus about $1,048 per acre-foot for untreated MET water, which comes out to about $1.8 billion versus about $700 million in total for that period.

That’s about $1.1 billion dollars that could be used for the cheaper and more efficient water supply alternatives ignored by OCWD and Poseidon but examined by the forum panel of experts.

Panel members are former Huntington Beach mayor Debbie Cook, Irvine Ranch Water District’s Peer Swan, Coastkeeper’s Ray Hiemstra, and Garden Grove water officials. Members of the public, including Westminster City Councilmember Diana Carey, also spoke.

On March 11, the San Diego Union-Tribune posted an op-ed, “Desalination makes sense for Orange County”, written by Assemblywoman Pat Bates (Laguna Niguel). It is unclear why she was addressing the California Coastal Commission since the project was not on its March agenda.

The paper chose not to allow comments on her article. So here is my response to her piece which reads as if lifted from a Poseidon Resources press release.

She goaded me from her first sentence: “Anyone who has stepped outside in the past year has undoubtedly seen the effects of our state’s historic drought conditions.”

Perhaps Ms. Bates should take a look around her own district before she goes off with her dire news of “empty reservoirs, dry wells, and brown, arid landscapes across California.”

Orange County is the poster child of disregard for the drought: lush green expanses of grass in front of strip malls, road medians, HOAs, government facilities, and private properties. Any claim she makes that Orange County has “tried” to do its part is laughable.

Ms. Bate’s vision of Orange County without Poseidon? Photo: SCV

It is interesting that Ms. Bates would chime in on a project outside her district that runs roughly from Dana Point to Cardiff by the Sea in San Diego County. Her district imports nearly 100 percent of its water. North Orange County imports only 30 percent and it could be zero if we managed the groundwater basin equitably.

“Trying” isn’t good enough, especially when it places the burden of costly boutique desalinated water on those who are actually “doing” something.

Residents of Santa Ana and Westminster are close to an ideal goal of consumption of 100 gallons per person per day. At the other extreme are communities like Villa Park and Northern San Diego County, where 500 gallons per person per day is the norm.

Why is 100 gallons per person per day ideal? Because at that level, North Orange County could get nearly 100 percent of its water from the groundwater basin.

The manner of water allocation used by the Orange County Water District and its member agencies places a disproportionately higher cost burden on those who consume the least amount of water. In effect, those who aren’t just “trying” but are implementing conservation will be subsidizing the explosive costs of ocean desalinated water.

Lush parkways in Bates’ assembly district (this one in San Clemente), located in an area that must import 100 percent of its drinking water, seem to contradict the idea of sound water resources management. Photo: Google

And if North Orange County goes all in for an ocean desalination project, will Ms. Bates be sponsoring a bill to enable the OCWD rate payer to subsidize water sales to South Orange County water agencies?

Ms. Bates then goes on to cheer lead for desalination: “Southern California communities have rallied behind desalinated ocean water as a reliable, safe and environmentally friendly solution to long-term water shortages.”

It is interesting to note that a small consortium of communities in her own district have spent millions of dollars building and evaluating a pilot project in Dana Point only to discover they couldn’t “rally” enough support for such an expensive endeavor.

Ms. Bates reports on the “nearly completed” project in Carlsbad. But we are still waiting to see how the San Diego County Water Authority allocates the costs of this project, a painful task they have been discussing and postponing since 2012. The devil is in the details, details that were not sorted out prior to signing a “take or pay” contract.

Ms. Bates calls desalination “out of the box” thinking but in reality it is a knee jerk reaction by politicians who have ignored California’s failed water policies, archaic water laws, and fractured governance.

Addressing long term water needs requires long term thinking which will never be the domain of politicians in Sacramento.

It is much easier for elected officials to apply a “technical” fix knowing they will be out of office before the bill arrives.

What we need are courageous politicians who dare to engage with citizens in understanding and exploring solutions that actually address water needs and not water wants.

North Orange County does not need an ocean desalination project and hasn’t even figured out what they would do with the water. If Ms. Bates thinks one is needed in South Orange County, then she should address her own district’s needs first.

Some of Orange County’s water managers and politicians insist that a proposed partnership between Poseidon Resources Inc. and the Orange County Water District to build a $1 billion ocean desalination plant in Huntington Beach is a good deal at even three or more times the $600 an-acre-foot price currently paid by OCWD for imported water.

That’s a great price to pay for a reliable source of water during shortages caused by drought, earthquakes, and population growth, they say, because it would protect our economy and general welfare.

Those proposed changes are much more cost effective than desalination and would help to maintain a reliable marine life population along the California coast.

Now a new idea has come forth from one of the County’s most experienced water managers, Peer Swan, who serves on the Irvine Ranch Water District Board of Directors.

Speaking to over 200 Orange County residents at a town-hall meeting in Huntington Beach on March 4, Swan explained how a commonsense change in the way we manage our groundwater basin and water imports could provide all the reliability we need, avoiding nearly $1 billion in desalination costs every 10 years.

On average, north Orange County gets about 70 percent of its water by pumping it from the groundwater basin. The 30 percent difference is made up with water purchases that member agencies make from the Metropolitan Water District of Southern California (MWD).

OCWD manages the basin to prevent excessive overdraft, but not necessarily to maximize its potential capacity.

There are three major sources of water used to recharge the basin: 1) rainfall/Santa Ana river flows; 2) the Ground Water Replenishment System (turning waste water into drinking water); and, 3) imported water from MWD.

Swan’s solution for water reliability is simple.

Historically, severe drought has caused MWD to reduce water allocations in one out of 15 years. To be conservative, Swan assumed water rationing in two out of ten years.

If OCWD and its member agencies withdrew less water from the basin during the eight years that have rain while maximizing their use of imported water, the basin would be full for dry periods, acting as our water reliability “insurance” policy during years of water rationing.

Before shifting an exorbitant $1 billion insurance policy to the ratepayers, water managers should thoroughly analyze all of the commonsense alternatives.

But the OCWD’s board of directors has been loath to use commonsense over the past year, rushing toward a draft contract with Poseidon, while limiting transparency and public discussion of important issues left unanswered.

Ratepayers want reduced water bills. Conservationists want reduced environmental impacts. These two constituencies are not necessarily mutually exclusive, but Swan’s commonsense approach would answer both of their concerns.

It is simply not good enough for our elected representatives on water boards to respond with the hollow claim that, “Even if we did all the alternatives first, we still need the water Poseidon is offering.”

Without numbers and analysis attached to that unsupported claim, we shouldn’t give Poseidon our trust, or our money.

Poseidon is pushing OWCD hard to sign a “take or pay” contract—the ratepayers must buy its boutique water even in the 14 years that it isn’t needed (assuming it ever would be).

But as ratepayers in Australia recently learned, racing to build desalination facilities before exhausting better alternatives has turned out to be short sighted and costly for ratepayers who were forced to take water they didn’t need after all.

If OCWD signs Poseidon’s proposed “take or pay” contract before implementing preferable alternatives, Australia’s costly lesson on water mismanagement will have been lost at the expense of Orange County’s ratepayers.

Give me a chimpanzee with a dart board and I’ll give you an equally unreliable water demand forecast as we are getting from Orange County’s water leaders.

Who cares about a forecast you say? It’s just garbage in, garbage out?

We will all care when we discover that taking out the garbage just cost us a billion dollars for an ocean desalination project!

In business, you risk your own money when you make a bad forecast. In the public arena, the public pays the cost of bad forecasting in expensive and unnecessary projects.

In Orange County, hardly a meeting of a water agency goes by without a board member championing the need for ever-increasing water supplies. On two recent occasions I have heard Orange County Water District Board Member Cathy Green project that “we” needed another 80 to 90 thousand acre feet of water by 2035 due to projected population increases.

Many, if not most public agencies rely heavily on population growth as a driver of future water demand forecasts. It seems logical at first blush; more people, more demand. But the reality is more nuanced, and population and consumption are becoming poorly correlated due to many factors.

The Seattle Public Utilities is a case on point. Prior to investing heavily in massive infrastructure, they decided to re-visit their demand projection forecasts that were constantly revised downward, as shown in the chart below.

For example, they discovered that in 1985 the City of Seattle projected that demand by 2000 would be 200 million gallons per day (mg/d) and by 2005 would be 210 to 215 mg/d. The actual 1987 demand turned out to be 147mg/d and in 1992 it was 130 mg/d.

In the Seattle region, the reevaluation of demand forecasting ushered in the adoption of new forecasting models that serve the unique characteristics of each community. Population is still a consideration but it is now modified by mitigating factors. These changes have resulted in the determination that water demands could be met through 2050 without additional and costly infrastructure projects.

Indeed, nationwide, urban water consumption is responding to practices that are driving down per capita consumption, including the price of water, frequency of billing, changing demographics, housing types, the extent of adoption of efficient technologies, conservation, and the effect of education and public attitude.

Has Orange County avoided this national trend? Let’s see.

OCWD manages the Orange County groundwater basin and serves those cities that hold rights to pump from the basin. This year, the basin is providing 72 percent of North Orange County’s water needs.

From the OCWD website I was able to download Engineer’s Reports from the past eight years. From these and other public documents you can see that OCWD members are making the same forecasting errors that were being made in the Seattle region.

In 2005/06 OCWD forecast demand would jump from the then current demand of 500,000 acre-feet to 614,000 acre feet by 2025. By 2012/13 they had modified projections from the then current demand of 435,000 acre feet to 525,000 acre feet by 2035. In an eight year span the demand forecast had been reduced by 89,000 acre feet without any analysis or comment.

But what is the trend in the OCWD service area? In other public documents I found historic data going back to 1989. If you run a linear trend line forward you see that consumption is trending downward, not upward.

There is no debate that population has increased in Orange County. However, reading OCWD’s reports shows that perhaps we need to bring back the chimp for another round. Here are the reported then-current populations and projected populations listed in the reports:

The reality check was the 2010 census, but future and past population numbers appear to be plucked from thin air, lacking any kind of objectivity or scientific rigor. I think it is fair to say that these figures are random at best.

Orange County has not bucked the nationwide trend of declining per capita consumption. But like many water agencies, OCWD ignores the data or uses it to promote a self-serving agenda.

What we focus on determines what we get. Unions and consultants want to build massive infrastructure projects and favor forecasts that show growth in demand. Ecologists want multi-benefit solutions that reduce environmental harms. Rate payers want abundant water and stable rates but are caught in the middle, confused by bad forecasts and misinformation.

Accurate forecasting allows agencies to meet water needs in an efficient manner and at the minimum cost. But if our forecasting is consistently bad, if we never submit our data to a reality check, then we can easily forecast a future of costly water decisions.

The table takes up almost half of the room, which is less than the size of the garage space provided at your local self-service car wash.

Bilodeau sat with five fellow members of the OCWD Board of Directors (Sarmiento, Green, Anthony, Flory and Dewane), their legal counsel, a staff member, and the general manager who always sits at the head of the table under a wall TV.

The wall facing the general manager from the other end of the table and the wall to his right were lined with chairs occupied by other staff and a couple of public citizens.

Bilodeau sat on the side of the room to the general manager’s left. And there I was, standing a few feet behind him, with my iPhone perched on a monopod far above the back of his neck.

Directly behind me was a counter-top with the usual breakfast buffet of hard-boiled eggs, Danish, muffins, bagels, and fruit for the directors—bought with ratepayers’ money for about $95.00

Take Vincent Sarimiento, appointed to the board by the Santa Ana City Council upon which he serves. He isn’t the only delusional OCWD director, but he oozes with sincerity.

But first, some background.

The OCWD manages the groundwater underneath the Santa Ana river, supplying 70 percent of the drinking water for 2.4 million residents living in 17 cities in central and northern Orange County. Continue Reading